• A child under age 13 who qualifies as a dependent for Federal income tax purposes,

• Your disabled spouse who is not physically or mentally able to care for himself or herself,

• Any disabled person who is not physically or mentally able to care for herself or himself whom you can claim as a dependent (or could claim as a dependent except that the person had gross income of $3,500 or more, or filed a joint return.)

How much money can someone put into this plan?

There is a limit on how much money an individual can contribute to this account. The amount should not exceed the lower of either your annual earned income or your spouse’s annual earned income. In any case, the maximum you can contribute to this account is normally $5,000 per family per calendar year.

If you are married filing separately on your taxes, the maximum is limited to $2,500; however, there are exceptions for a parent who has lived apart from his or her spouse for the last 6 months. (See the IRS Instructions for Form 2441.)

If your spouse is seeking work, is a student or is disabled, you may also be allowed to participate in funding a dependent care account. For specifics, please read the IRS Instructions for Form 2441, Child and Dependent Care Expenses, which you can download here.

Regarding divorced or separated parents

Even if you cannot claim your child as a dependent, he or she is treated as your qualifying individual by the IRS and you can participate in a dependent care reimbursement account if:

1. Your child was under age 13 or was physically or mentally not able to take care of himself or herself, and

2. You were the child’s custodial parent (the child lived with you the greater part of the year).

In these cases the non-custodial parent cannot participate in this account even if they claim them as a dependent on their taxes.

What can & cannot be paid for
from the plan

The pre-tax dollars in a Dependent Care Reimbursement Account are used to help pay for the qualifying individual’s care, wellbeing and protection. This can include the cost of care provided outside or inside the home.

Preschool, before and after school care and day camp during the summer for children under the age of 13 is one example of a qualified expense. The cost of school for a child (including kindergarten) and overnight camps are specifically prohibited, however.

The person who is being paid to provide the care cannot be your spouse, the parent of the qualifying individual or any person whom you can claim as a dependent. Therefore, if one of your children provides the care then the child must be age 19 or older by the end of the year and cannot be your dependent.

Is this plan right for every family?

Before an individual signs up for YourFlex’s Dependent Care Reimbursement Account, it's good to do a little math. Here's some considerations:

How can I access my pre-tax funds?

Once you sign up to participate in a Dependent Care Reimbursement Account, your employer will divide your election amount for the year by the number of pay periods in the year and deduct that per-pay-period amount from your paycheck pre-tax.

YourFlex can reimburse you for any daycare services received once the plan year begins, starting with the first day of the plan year.

When paying a daycare provider, ask for a receipt including the name of the provider, address, their EIN/SSN, the name of the child for which services were provided, the date the services were provided and the amount you paid. Then submit the receipt along with a Reimbursement Request to YourFlex.

In this account, YourFlex can reimburse you only up to the amount of funds available in your account at all times.

When YourFlex receives your Dependent Care contribution from your employer, your account will be credited and you will be reimbursed for any claims currently in your YourFlex account, up to the amount of contributions.

YourFlex processes reimbursements once a week. Any claims received by Tuesday at 5 p.m. EST are paid. Checks are mailed by Friday. If you sign up for direct deposit the reimbursement will be in your bank account by Friday.

IRS regulations stipulate that reimbursement for daycare services should be paid only after the services have been provided. For example, if the receipt states that the date of service is Monday, June 23, 2008, through Friday, June 27, 2008, your claim will be dated Friday, June 27 and will be paid out the following week. The same rules apply for monthly payments. The claim will be processed for payment on the final date of service.

Note: If you have an allowable termination from the plan during a plan year, you will be reimbursed for services received through the end of the plan year and you have an additional 90 days after the end of the plan year to submit receipts and get your money out of your account.

Any amounts remaining after that 90-day grace period cannot be returned and will be lost. This is sometimes referred to as the Use It or Lose It Rule. Be conservative and don’t put any more in your account than you are certain you will use.